Kuwait starts merging state oil companies to cut costs

• Kuwait has 8 state oil companies
• Four KPC subsidiaries to merge
• Target of 4 million bpd of oil

Opec producer Kuwait has started to merge its state oil companies to reduce their number, improve efficiency and trim costs, according to the official news agency, Kuna.

The Kuwait National Petroleum Company (KNPC), the Gulf emirate’s downstream investment arm, has started to take over the Kuwait Integrated Petroleum Industries Company (KIPIC), which manages the Al-Zour oil refinery, one of the world’s largest refining units with capacity of 615,000 barrels per day, Kuna reported on Tuesday.

“The rapidly evolving global oil and gas industries place a great responsibility on the country’s energy sector to adapt and enhance to such changing dynamics,” KNPC’s CEO Wadha Al-Khateeb said.

Al-Khateeb reaffirmed the oil sector’s commitment to fulfilling obligations to customers while sustaining growth, Kuna reported.

Tuesday’s reported move is part of a plan approved by Kuwait’s Supreme Petroleum Council to restructure the country’s oil sector following the Covid-19 pandemic, which inflicted losses on some of Kuwait’s oil industries.

The Kuwaiti daily Alanba said last year that the Kuwait Petroleum Corporation, which manages the country’s hydrocarbon sector, has devised plans for the merger of four of its subsidiaries and that the process would start at the end of March.

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It said the merger would involve KIPIC with KNPC and the Kuwait Oil Company with the Kuwait Gulf Oil Company, which manages Kuwait’s oil interests in the Neutral Zone shared by Saudi Arabia and Kuwait.

Kuwait aims to expand oil and gas production capacity to 4 million bpd and 1.5 billion cubic feet per day respectively. It has eight main state-owned oil companies and controls nearly 101 billion barrels of recoverable crude deposits, the world’s sixth largest reserves.

In 2020 KPC appointed the US-based consultant Strategy& to carry out a study for restructuring the oil sector, which will remain managed by KPC.